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June 24, 2014 SEC Release No. 34-72460: http://www.sec.gov/rules/other/2014/34-72460.pdf

Duration: Pilot is for 1- year
Securities:
1. Market cap of $5 billion or less;
2. ADV of 1 million shares or less; and
3. Per share price of $2 or more
Pilot Design: 1 control group and 3 test groups; 300 pilot securities per group
Timeline: SEC has ordered the exchanges and FINRA to act jointly in developing and filing with the Commission a NMS plan to implement a pilot
program, no later than 60 days after issuance of this Order (~End of August 2014). Once filed, the Commission would publish the Tick Size Pilot Plan
for public comment, and thereafter consider whether to approve it (Q2-2014?).
SEC Terms and Conditions of Tick Size Pilot:
GENERAL PILOT *EXCEPTIONS
Trading Increment Trade-At Significant Px Improvement Certain
Negotiated Trades
Tradable at Non-Displayed Venues
Quotes

Trades Midpoint
Only
Retail Orders Px
Improvement
Block Size
Exception
ISO Exception
Control
Group
$.01 - -

-

-

-

-

-

Test Group
#1
$.05 -

- -

-

-

- -
Test Group
#2
$.05 $.05* - Yes Minimum $.005
improvement
(10% of $.05)
Volume/Time
Weighted,
Qualified
Contingent
Trades**
- -
Test Group
#3
$.05 $.05* Prevent trading
at trading center
not displaying
quote*
Yes Minimum $.005
improvement
(10% of $.05)
Volume/Time
Weighted,
Qualified
Contingent
Trades**
10,000 shares
or $200k of
value
Route ISOs to
execute protected
quote and then
execute remainder
at balance of order
at NBBO price
**Definitions from SEC Release:
US Equity Market Structure Brief: Summary of SEC Order for Tick Size Pilot
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June 24, 2014 SEC Release No. 34-72460: http://www.sec.gov/rules/other/2014/34-72460.pdf
A volume-weighted average price trade is calculated by summing up the products of the number of shares traded and the respective share
price, and dividing by the total number of shares bought. A time-weighted average price trade is calculated as the average price of a security
over a specified period of time.
A qualified contingent trade is a transaction consisting of two or more component orders, executed as agent or principal, where: (1) at least one
component order is in an NMS stock; (2) all components are effected with a product or price contingency that either has been agreed to by the
respective counterparties or arranged for by a broker-dealer as principal or agent; (3) the execution of one component is contingent upon the
execution of all other components at or near the same time; (4) the specific relationship between the component orders (e.g., the spread
between the prices of the component orders) is determined at the time the contingent order is placed; (5) the component orders bear a
derivative relationship to one another, represent different classes of shares of the same issuer, or involve the securities of participants in
mergers or with intentions to merge that have been announced or since cancelled; (6) the transaction is fully hedged (without regard to any
prior existing position) as a result of the other components of the contingent trade; and (7) the transaction that is part of a contingent trade
involves at least
Intermarket sweep orders are exceptions provided in Rule 611(b)(5) and (6) of Regulation NMS that enable an order router to sweep one or
more price levels simultaneously at multiple trading centers without violating trade-through restrictions. As defined in Rule 600(b)(30) of
Regulation NMS, intermarket sweep orders must be routed to execute against the full displayed size of any protected quotation that otherwise
would be traded through by the orders. See also Responses to Frequently Asked Questions Concerning Rule 611 and Rule 610 of Regulation
NMS, Question 4.04 (April 4, 2008 Update) (available at http://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm).






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